GBP/USD holds gains above 1.3200 amid US dollar weakness, Brexit woes

GBP/USD looks to extend its bullish momentum above 1.3200 into European trading this Monday, helped by the upbeat market mood-led additional weakness in the US dollar across its main competitors.

The haven demand for the US dollar got almost killed, as euphoria on the coronavirus vaccine progress, solid Chinese factory output and Japanese economic rebound lifted Asian equities to record highs. The risk-on mood partly offset concerns over virus cases and restrictions in the US, rendering dollar-negative.

Meanwhile, the higher-yielding pound took advantage of the risk-rally, shrugging off the latest negative developments surrounding the Brexit issue, as the negotiations over a potential trade deal between the UK and EU are likely to extend beyond this week.

Over the weekend, Irish Foreign Minister Simon Coveney noted: "if the UK imposes Internal Market Bill, we won't get a deal." Meanwhile, the UK Environment Secretary George Eustice said that the "agreement exists" between the two sides, keeping the hopes alive, as differences continue to persist over fisheries and state aid.

Markets will closely follow the global coronavirus statistics and Brexit updates amid a data-light calendar on both sides of the Atlantic. Although the risk trends could likely remain the key market driver.

GBP/USD technical levels

“The last week's high of 1.3313 is the level to beat for the bulls. A move above 1.3313 would invalidate buyer fatigue signaled by the long upper wick attached to the previous week's candle and open the doors for 1.3483. Alternatively, a move below the Asian session low of 1.3174 would validate the buyer fatigue signaled by the weekly candle and shift risk in favor of a drop to 1.3108 (5-week simple moving average),” Omkar Godbole, FXStreet’s Analyst explained.

GBP/USD additional levels